From 1948 when it achieved political independence until 1977, Sri Lanka followed a centralised administrative model which continued without severe challenge. During this period, the direction of the government was on cash accounting with an emphasis on Program and Performance Budgeting (PPB). Since the 1970s, the Sri Lankan government has attempted to address its critical economic problems such as high unemployment and high poverty, through various public sector reform processes (Samaratunge and Bennington, 2002, Priyantha, 2007). Most of the reforms undertaken during the early days were based on a managerial platform of political and administration decentralisation, privatisation and commercialisation. Table 2.1 presents an outline of major reforms and the reasons for them.
Table 2.1- Major public sector reform strategies in Sri Lanka until 2000s
Period Reform strategy Major theme Closest reason for reforms
1971 Introduce divisional development council (DDCs) Decentralization- administration
To address critical problems such as unemployment and high poverty
1973 Introduce district political authority (DPA) Decentralization- political
To introduce political leadership at the local level
21 1980 Introduce district
minister system (DM)
Decentralization- political & admin
Dissolve DPA system and DM system is for better coordination between functional minister and district minister
1987 Introduce Provincial Council (PC) system
Decentralization- political & admin
Dissolve DM system due to weak coordination. PC system is for better responsive public service delivery
1987 Appoint Presidential committee on Privatisation, corporatized and privatised government entities Privatization and commercialisation
To reduce government public debt, international pressure, but achieved only limited success due to inadequate institutional arrangement and absence of minimal safety nets for retrenched workers.
1990s
Training staff to more effectively and redeployment of surplus staff;
Private style management practice
International development agencies pressure to increase the productivity in public service.
1997
Introduce
performance and aptitude appraisals for senior civil servants, with annual increments and promotions linked with outcomes Explicit standards and measures of performance
Motivate and encourage public servants to be more effective and efficient in public service.
(Source: Samaratunge & Bennington 2002)
Within the provisions of the new Constitution in 1972, a five-year development plan was introduced to increase the annual economic growth by 6 per cent from 1972 to 1976. For example, budget estimates for ministries of education, health and finance were drafted on the basis of PPB in 1971 (Treasury, 1971). In this reform, the Government introduced Divisional Development Councils (DDCs), a form of decentralisation to create rural employment using available local resources; however, due to poor policy implementation and a series of management problems, DDCs were
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withdrawn and replaced with the District Political Authority (DPA) in 1973. The system of DPAs attempted for the first time to introduce political leadership at a local level (Samaratunge and Bennington, 2002). The Government announced that the main objective of the DPA was primarily to accelerate food production in the district and to address the general supervision of the administrative affairs in the district (Ranasinghe, 2014).
The Agent of Government (AG) became the administrative coordinator in the execution of decisions taken by the District Planning Unit, which consisted of the DPA and the Member of Parliament (MP) within the district. With the increasing power of MPs, the AG acted as a coordinator of the development activities in consultation with the politicians in the district. The DM system was introduced to provide political input at the district level. District Ministers were Members of Parliament appointed by the President to work closely with functional ministers at central government level. But due to the bureaucratic power of the Central Government, most of the reforms at district level were not successful (Samaratunge and Bennington, 2002).
After 1977, the UNP government introduced new economic liberalisation policies which attempted to align with global economic trends and to foster private sector involvement in economic activities. Adhikari et al. (2013), in their study on Nepal and Sri Lanka stated that the implementation of public sector accounting reforms in LDCs has been a key agenda of international organizations since the 1980s. The findings of the study demonstrated that colonialism has influenced Sri Lanka to promote accounting education and training, enabling the country to implement some of the public sector reforms. In line with these initiatives, the liberal economic policies adopted by Sri Lanka were supported by the IMF and granted some financial assistance (Adhikari et al, 2013).
In the early 1980s, privatisation was seen as a means of addressing the challenges arising from globalisation. During this period, initial discussions took place on accrual accounting in the public sector in Sri Lanka and a Presidential committee was appointed in Sri Lanka to develop the necessary legal and institutional framework for the process of privatisation (Central Bank 2002; Government of
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Sri Lanka 1987). The responsibilities of this committee were to: provide Sri Lanka’s accounting and audit authorities and other interested stakeholders, with a common strongly founded knowledge (including accrual accounting) regarding the status of local practices in accordance with the internationally developed standards of financial reporting and audit; assess the prevailing variances; chart paths to reduce the variances; and provide an ongoing basis for measuring improvements in the economy. However, the ethnic-based civil war that began in the 1980s led to several decentralisation initiatives in the public sector reform program which was introduced in 1987, one of which was the establishment of Provincial Councils (Samaratunge et al, 2008).
In addition to privatisation, the government adopted a number of administrative reforms. In 1997, the Government introduced a number of reforms with the support of international development agencies such as the Asian Development Bank (ADB) (Jayawardena, 1997): These include the:
adaptation of strategic policy formulation and policy coordination to more effectively achieve policy outcomes;
adoption of a result-oriented philosophy as the guiding management principle; separation of policy-making, service delivery and regulatory functions of government; realignment of responsibilities to more effectively support the goals of government;
training staff to more effectively respond to the new environment and thereby realize their potential; and
redeployment of surplus staff, if any, to new functions within government or to new opportunities in the private sector.
In 1997, the Government introduced performance and aptitude appraisals for senior civil servants, with annual increments and promotion linked to the outcomes of the assessments (Samaratunge and Bennington, 2002). The objective of this initiative was to encourage active participation of public servants in the management of government operations. The Ministry of Public Administration also introduced a new recruitment and selection method to select competent professionals to implement
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such reforms. However, these changes were challenging, as bureaucrats were not readily available for the effective implementation of these new arrangements.
Many of these reforms did not achieve the desired outcomes due to various reason attributable to the high degree of politicisation of the bureaucracy, the lack of coordination level of government, and the bureaucratic domination of the system, all of which hampered the reforms (Samaratunge and Bennington, 2002).